Home insurance is a generic term for two different insurance products. Buildings insurance to protect the structure of the property and contents insurance to cover your household objects and valuables.
What makes buying home insurance awkard is that not all policies are created equal making it hard to compare like with like. The options and level of protection offered vary from policy to policy along with the price. So having a definite idea of what you need to insure and for how much will help minimise the overall time and money spent buying it.
TIP 1: Reduce the risk, reduce the premium
Insurance protects against the risk of financial loss. So to cut the cost to you, cut the risk to the insurance company and you”ll be rewarded with a lower premium. Heres a quick summary of the most effective measures you can take.
Contact your home insurance company or local neighbourhood watch scheme and they will provide a list of steps to make your property more secure and lower insurance risk.
Fit good window locks and level 5 (BS3621) mortise deadlocks locks to the doors. Most insurers will give you up to 10% off your contents insurance if you have these kind of locks fitted.
Consider having an alarm fitted by a recognised alarm fitter, which your insurance company can recommend. Again this can give you up to 10% of your premium. However, these can be expensive and require an annual checkup.
Higher policy excess. Usually you will have to pay the first ?50 of any claim, but if you”re willing to pay more, your premium will fall.
Neighbourhood watch. Some insurers offer discounts if you live in a neighbourhood watch area; however this is becoming less common.
Good no claims bonus. As with your car insurance; a record of no previous claims will reduce your premium substantially. If you need to make a claim, consider whether it may be cheaper to pay for the loss yourself to avoid an increase in premiums.
Your age. Statistics show that the older you are, the less likely you are to make a home insurance claim. So if you”re a lower risk this will be reflected in your premiums.
Extra precautions. Make sure you declare any special safety precautions you”ve made for your valuables such as a home safe.
Your lifestyle. If you have a dog, are teetotal and don”t smoke, be sure to declare this as these and other factors are used by some insurers to reduce premiums.
Consider applying to your existing insurer as a new customer. Many insurers offer discounts to new customers which won”t be repeated when you come to renew.
Apply online and you will normally get a discount of around 5%.
Always check with your home insurance company first before you carry out any security improvements. They will confirm which improvements will have the biggest cost cutting impact.
TIP 2: Only pay for the home insurance you need
Working out an accurate figure for the buildings and contents insurance value can be awkward, which is why a lot of homeowners are either under insured or paying for cover they don”t really need.
Buildings insurance covers the cost of re-building your property in the event of fire, flood and subsidence etc, not its market value. The re-build value of your home can usually be found on your mortgage agreement, or property deeds. The Building Cost Information Service (BCIS) of the Royal Institution of Chartered Surveyors (RICS) provide a range of guidance on the cost of rebuilding houses and flats together with a useful re-building cost calculator.
Or you can opt for a policy that has an unlimited or high standard buildings sum insured so you don”t have to be concerned about insuring the right amount.
Home contents insurance covers almost everything else you would take with you if you moved house. Make a list of the rooms in your house and write down all the items contained in each with its value. Once you”ve done this, total the individual amounts to see what contents insurance protection you need. Remember to value items such as CD”s, videos and clothing as their collective cost is often under insured.
TIP 3: Consider separate policies
If you need both buildings and contents insurance, get quotes for separate policies for maximum potential savings. Most insurers do provide them as separate policies and just because one is cheap for buildings cover doesn”t mean they are equally competitive to insure the contents. Find the cheapest providers for each component and consider buying each from different home insurance companies.
TIP 4: Shop around for maximum home insurance savings
Like any other product, the biggest savings are revealed by shopping around and pitching one provider against the competition.
Firstly, don”t simply opt for the home insurance supplied by your mortgage lender. They can be convenient when your busy sorting your mortgage but they”re often over priced and chances are they won”t have been compared against other policies on the market.
When shopping for insurance you basically have three options; go direct to the insurer, browse the web or use a broker. If you have the time and commitment you can do all three, but the fastest and most effective route is to log on and use the reach of the internet.
The best insurance websites compare dozens of brokers and home insurance companies in minutes. You only have to fill in one form to get a list of premiums displayed on your screen from major insurers and brokers. However, if you have unusual or very specific requirements the final premium may increase when confirmed direct with your chosen insurer.
TIP 5: Ask for a good deal
The insurance industry is a very competitive market which can be used to your advantage.
Home insurance has a margin of profit built into it which can be negotiated down if you”re armed with the right information. Not every insurer will concede an additional discount but if you don”t ask you won”t know.
First, find the cheapest quote after using internet comparison sites and phoning a few brokers.
Take the cheapest quote and contact your existing insurer first asking them to beat it. If they won”t budge contact the second cheapest insurer and do the same.
If the insurer won”t cut the premium, ask them to throw in some extra cover to sweeten the deal or move on to the next home insurance company on your list and repeat the exercise.
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